When Armageddon Means Reinvention in Retail
Pundits will say that we're in the midst of a retail apocalypse. In 2017 alone, 21 major retailers closed their stores and dozens of brand-name chains around the country filed for bankruptcy. But before you start building your bunker, there's an opportunity for retailers looking for a saving grace: reinvention.
To outwit the competition, retailers have been analyzing their business strategies and switching things up by 180 degrees to stay on top. However, this approach isn’t just reserved for the big guys, especially when there are lessons to be learned from those that have turned a new leaf.
The Limited Becomes a Private Brand
When The Limited was forced to close its doors, it could have called it quits forever. Instead, the brand turned its national brand strategy into a private brand strategy. In its second life, The Limited has aligned itself strategically with Belk to be sold as a private brand. Not only has this move saved The Limited, it has also allowed the brand to expand into new horizons.
In the 1990s The Limited pivoted to appeal to older women in need of workwear. The decision ultimately stagnated the business and sucked it dry of its appeal. Although the rebranded line will still focus on workwear, this time around there will be a wholehearted effort to be inclusive of all women by expanding its sizes to include plus, petite, tall and denim. This focus on tailoring products is key for national brands looking for a second chance with a new private brand strategy.
If other struggling national brands can align themselves with a retailer while offering a personalized product, then they too could be looking at a potentially successful private brand opportunity. And retailers should be open to embracing these new lines, especially since 52 percent of shoppers say they specifically shop at a store because of its private brands, according to a forthcoming Daymon private brand study.
Campbell’s Delivers Direct to Consumers
After a three-year slump, Campbell Soup Co. is getting with the times and launching a new online service that allows the company to bypass retailers and get to shoppers more efficiently.
Campbell’s has already made forays into e-commerce. Its chili macaroni and chicken noodle are some of the best-selling soups on Amazon.com. However, this test project is attempting to forge a direct link with shoppers, setting the stage for customers to browse for canned soup on Campbell’s website and have the soup shipped to their front doors. What’s more, the new business model will also capitalize on the “craft” movement by creating soup that's packed with local ingredients and sold in environmentally healthy (and trendy) glass mason jars.
As Campbell's has learned, no business model is safe in the cut-throat retail world, so brands need to take a good, hard look at what customers want and deliver on those demands. Consider that 95 percent of shoppers say they would consider shopping at another site if the shipping options available weren’t suitable to their needs, according to a Shutl survey. So whether fulfilling those needs means shipping direct, working with a more accessible retailer to send products or air dropping items, the sky should be the limit.
Everlane Ditches Online-Only Strategy
Everlane, the online startup darling, has done what it said it would never do — open a brick-and-mortar shop. While shoppers have benefited from the brand’s “radical transparency,” with a cost breakdown and profit margin on the website front and center, the truth of the matter is that shoppers want more than what can be offered online. Everlane’s customers have voiced their needs and agree that they want to touch a product before they buy it. The only way Everlane can address that is by setting up shop — a physical shop.
As we know, building for the sake of building is out … but experiential retail is in. According to the National Retail Federation’s 2017 Consumer View report, which polled millennial and Gen Z consumers, 49 percent of those surveyed visit stores more often than they used to because of new entertainment or food options. Furthermore, nearly half of respondents said they were shopping in more stores than they were a year ago. So, for brands looking to revamp failing physical stores, focus on experiences like the ones Everlane will offer at its new stores. Sure, sell merchandise, but also take a cue from Everlane and start facilitating talks, hosting workshops, and booking performances to differentiate the in-store experience.
Retail armageddon might sound like the end of the world, but it doesn’t need to result in a self-fulfilling prophecy. Instead, retailers should look at how to refresh themselves whether through an out-of-the-box brand strategy, an unforeseen delivery method or something new entirely.
Jim Holbrook is the CEO of Daymon, a provider of expert global retail strategies and services.
